Design within overreach: How a plan to make affordable housing beautiful ran into reality

David Adjaye's critically acclaimed Sugar Hill Development on West 155th Street has sent per-unit prices for affordable-housing construction to new heights.

Back in November, officials from the de Blasio administration cut the ribbon on an affordable-housing development designed by renowned British architect David Adjaye in Manhattan's Sugar Hill neighborhood. Cue the fanfare: The building's unique, cantilevered design, along with its ground-floor school and children's museum, landed it on a news website's list of "11 projects that prove affordable housing can be beautiful." It was hailed by New York magazine as "the kind of high-design, low-cost housing that the city needs."

Actually, it's becoming clear how high the cost of high design can reach for taxpayers. The nonprofit that built what's called the Sugar Hill Development has asked the City Council to cover $4 million in construction cost overruns on the now $70 million residential portion of the building, bringing the per-unit price to more than $550,000.The 124-unit structure is one of several financed under the Bloomberg administration that have gone well beyond the average cost for affordable housing in the city, which industry experts say has rarely exceeded $400,000 per unit.On the one hand, the projects have delivered benefits that are highly desired by many communities across the city, from preserving historic architecture to opening early-childhood education centers. Yet they also raise the question of how much Mayor Bill de Blasio should tap into scarce dollars for housing to fulfill his other policy goals—more union construction, for instance, or environmental sustainability. All this as he seeks to create 80,000 units of affordable housing by 2024 in the nation's most expensive construction market.

"The city has limited resources to build affordable housing, but it also needs to think about the value of urban design, even if it adds to costs," said Mark Willis, executive director of New York University's Furman Center for Real Estate and Urban Policy. "Striking the right balance between more housing units and fitting buildings into the fabric of the community falls into a bit of a gray area."

From the outset, the 13-story Sugar Hill Development was destined to be costly for Broadway Housing Communities, a nonprofit that had previously done only renovation jobs. The steeply graded site on West 155th Street presented logistical hurdles, and construction crews received prevailing wages."Sugar Hill was a challenging project—featuring 100% affordable housing, an early-childhood center and a cultural institution—on a difficult site," Broadway Housing Chief Operating Officer Mary Ann Villari said in a statement. "Construction costs were higher than anticipated."Yet design elements such as Mr. Adjaye's irregular façades of granite-hued concrete and his cantilevered upper portion of the building helped push the price tag so high that the project skewed the per-unit average for all low-income rental developments in the city in 2012.Supporters say the eye-catching architecture leveraged $14 million in philanthropic dollars to help build a local cultural attraction. "Sugar Hill represents a good investment for taxpayers who've received in return a museum and an early-childhood education center in addition to affordable housing," said William Traylor, who helped arrange the financing with tax credits and grants from the city, state and federal governments.A similar story can be found at an affordable-housing project farther south in Harlem's El Barrio called ArtSpace P.S. 109. There, a largely publicly financed renovation of a former public school cost nearly $550,000, about the same as the newly built Sugar Hill. But supporters noted at its 2012 groundbreaking that it would yield not only 89 affordable live/work spaces for artists and their families, but also a 10,000-square-foot community center and the revitalization of a handsome but decaying neighborhood anchor.Indeed, the local councilwoman, Melissa Mark-Viverito, who is now City Council speaker, emphasized the cultural benefits of El Barrio's ArtSpace over the housing. "This innovative project will help solidify El Barrio/East Harlem's place as a cultural destination that celebrates the arts and the incredible contributions that artists make to our community," she said in a 2012 press release.In the Bronx, a 222-unit housing complex called Via Verde was the winner of a highly publicized, city-sponsored design competition that eventually came in at $441,000 per unit, according to an August 2013 study by consulting firm HR&A Advisors. The project, in Melrose, features a combination of cooperative and rental units for low- and middle-income residents, along with rooftop greenery, solar panels and LEED Gold certification. It opened in 2012.Although these buildings and others have proved popular in their communities and have delivered more than just affordable apartments—leveraging a fraction of their construction costs from the art, sustainability or philanthropic worlds in the process—a debate on whether scarce public housing dollars should be used to pay the lion's share of the tab has been simmering in City Hall for years.In September 2010, Rafael Cestero, then the city's housing commissioner, warned at a policy breakfast that escalating design costs for a handful of affordable projects were upsetting the balance between quality and quantity, according to a number of people in attendance. (Mr. Cestero, now an executive at nonprofit housing developer CPC Resources, declined to comment for this story.)

124 apartments, 48,000 applicants

The demand for affordable apartments is clear: 48,000 families applied for Sugar Hill's 124 apartments, for example. And the money spent on projects such as ArtSpace could have produced more units elsewhere. The ArtSpace renovation cost twice as much per unit but was half the size of an ecofriendly, ground-up Brooklyn project called Dumont Green that the city funded in 2011, according to the 2013 HR&A study.

"Our mission is to create neighborhoods, and sometimes the opportunity to do a unique project can help build momentum and create a sense of place and identity," a Department of Housing Preservation and Development spokesman said, noting that these projects are a fraction of the department's output.But a number of experts in the affordable-housing world, who did not want to be named because they do business with the city, argue that substantial housing money should not be used for unrelated agendas at the expense of building more units. Although the mayor has doubled the capital budget for affordable housing, federal subsidies are on the decline.One such stream, called Home funds, which are used heavily by HPD, has been slashed to $52 million this year from $117 million in 2006, according to a Crain's report."When people attack affordable-housing money, they point to these expensive projects," said one expert who did not want to be named.In 2010, for instance, U.S. Sens. John McCain and Tom Coburn drew up a list of what they deemed wasteful spending projects using federal stimulus money. Artist residences in Philadelphia and a pricey affordable-housing project in upstate New York both made the cut.In the 16 months since Mr. de Blasio took office, construction and land costs have risen dramatically as the economy has recovered.So although repurposing historic buildings and creating cultural and educational institutions are laudable goals, Mr. de Blasio will have to take a hard look at focusing his housing money on housing if he wants to hit a lofty benchmark in an increasingly crowded and expensive city.

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